The Liechtenstein financial institution has taken drastic cost-cutting measures this summer: 100 jobs have been cut. Although VP Bank hasn't reached its goal yet, it may soon introduce a new CEO.
As recently as March 2024, VP Bank was still on solid ground, reporting a full-year 2023 profit of 44.2 million Swiss francs ($51.1 million). Then-CEO Paul H. Arni praised the bank's performance, stating: «In a challenging geopolitical and interest rate environment, VP Bank was once again able to increase its profitability while normalizing cost growth. This positions us well for the second half of our strategy, where we will accelerate profitable growth, building on an open wealth-capable IT platform, a regional target organization, and improved risk management.»
However, by August, the situation looked starkly different. Arni had departed, and net profit for the first half of 2024 had dropped to 11.5 million francs, a decrease of nearly 55 percent year-on-year.
Closure of Hong Kong Branch
Management pulled the emergency brake, placing the company on a strict cost-reduction plan. As a result, one in ten jobs was cut and the Hong Kong branch in Asia was closed altogether. This is what is known as a «substantial efficiency measure.»
Looking back at the March 2023 presentation of the 2022 financial results, there were already signs of trouble. The annual report mentioned «extraordinary costs related to the complex handling and implementation of sanctions on Russian clients, as well as maintaining client documentation due to a revised risk assessment model.» These cases, involving around 600 million francs, will be transferred to an exit portfolio by the end of 2024. However, the bank is not yet free from the cases.
Dispute Over Finma Ruling
In another client-related case, which VP Bank settled in 2020, the Swiss Financial Market Supervisory Authority (Finma) concluded an enforcement proceeding with a ruling. As the VP Bank disagrees with some of the points, legal proceedings are ongoing.
While VP Bank faces no solvency issues, the efficiency measures have caused unrest – both internally and externally, as interim CEO Urs Monstein confirmed in an interview with finews.asia.
Urs Monstein (Image: zVg)
In Singapore, VP Bank had to appoint new co-leadership and is battling rumors of a complete exit from Asia.
«There is no talk of a retreat,» Monstein said. «Our focus in Asia remains on intermediary business, where we are seeing double-digit growth rates.»
The bank added that Hong Kong was closed because the intermediary business could be served more efficiently from Singapore.
Client Concerns
The focus on Asia has had positive effects in Switzerland and Liechtenstein, according to Monstein, who is optimistic about the future business outlook. However, client concerns persist.
«We still see some uncertainty among clients. We are not yet where I want us to be,» Monstein said.
Sale Not an Option
There is also speculation that VP Bank is being prepared for a sale. However, Monstein countered, saying it is «not even a statutory possibility today.»
VP Bank is controlled by three Liechtenstein foundations: the Hilti Foundation, the Marxer Foundation for Banking and Corporate Values, and the Guido Feger Foundation. The statutes of the latter stipulate that a sale is only an option if the bank is in financial distress. This is not the case at present; the balance sheet total at the end of June 2024 was 11.7 billion francs, which is stable compared to the end of 2023.
New CEO Soon
Monstein still has a lot of work ahead. One item on the to-do list may soon be checked off: finding a new CEO. Originally, the plan was to introduce a new CEO by the next general meeting. However, Monstein confirmed that the successor could be announced before the end of the year.
